If you are an avid blog reader of ours, you may remember that my last blog post was about the importance of getting your employment agreements reviewed periodically. This ensures that your agreements are still compliant with both current legislation and case law, because honestly, they keep changing!
Some of you may recall that legislation was enacted last year which resulted in the unenforceability of “non-compete” clauses in employment agreements. The presence of these clauses has the power now to invalidate the entire employment agreement you have with your employee.
Well, I’m (not so) pleased to announce there is yet another change to the requirements surrounding employment agreements.
A recent ruling in the Ontario Court of Appeal regarding termination clauses may have rendered your current clauses (yet again) void and unenforceable.
The Courts have determined that “all inclusive” statements, which state that a terminated employee will be entitled to “all notice, severance, and entitlements under the Employment Standard’s Act, 2000 (“ESA”) upon termination”, are no longer acceptable when there are additional entitlements, such as the existence of benefits. Apparently, the Court felt that if benefits are involved, they can’t be lumped in with “entitlements” anymore.
What this means is that the termination clauses in your current employment agreements may not be upheld if they are challenged in Court. This would result in your employee’s entitlement to notice not being capped under the ESA – which is kind of the whole point of an employment contract!
That’s all for now…. Until the next (not-so-soon) change!
Robin K. Mann, Associate Lawyer